Real Estate Information Archive


Displaying blog entries 1-10 of 13

Mortgage Rates Hit 20 Month Low

by Tim Hart

Freddie Mac announced the average rate for a 30-year conventional loan fell to 3.73% this week. The average rate fell from last week’s number of 3.87% and from 3.89% in later December, thanks to another strong week for the domestic economy, especially in comparison to continued financial struggles in Europe and Asia.

The average rate for a 15 year fixed loan also fell this week to 3.05 percent--down from 3.15 percent. 15 year mortgages are most popular with those looking to refinance and the low rates should be noted by anyone paying a 30 year fixed rate mortgage. Many homeowners have a great opportunity to save on their mortgage.

Both mortgage rates fell due to a strong outlook on the domestic economy. Unemployment benefit requests declined this week and wages continue to see improvement. As the Holidays seemed to prove, consumer confidence has also greatly increased in the US.

As investment in Europe and Asia has struggled, many investors are turning towards purchasing government bonds and securities. Yields on securities issued by Freddie Mac and Fannie Mae have fallen recently, perhaps due to their current demand. These securities encompass around 60% of all US mortgages. Bond investors have accepted lower yields on these securities, allowing mortgage bankers to charge lower interest rates to their customers.

Banks have also been trying to attract milennial first time home buyers to the market, who, as of yet, have not been buying up homes like previous generations.

Again, great news for home buyers, home owners and refinancers. Interest rates really add up over the life of a loan, so this kind of adjustment can really benefit buyers years down the line. Coupled with lower mortgage insurance rates, many home buyers who were not eligible even a month ago, may now be approved for a loan.



FHA Lowering Mortgage Insurance Rates

by Tim Hart

The Federal Housing Administration announced that it will lower the cost of its mortgage insurance for potential borrowers. The White House released a statement that they will lower the mortgage insurance rates from 1.35% of the loan’s value, down to 0.85 percent. Mortgage insurance is designed to keep lenders safe whenever a borrower defaults on their loan.

The change to the mortgage insurance rates could save a first-time homebuyer $900 a year on their payments. For a lot of buyers sitting on the fence, this may be the starting gun for which they were waiting. The White House believes that more than 250,000 additional, potential home buyers will now be able to purchase a home and stay within their means. Homeowners who already have an FHA loan will have the opportunity to refinance and also see similar savings.

The FHA had raised mortgage insurance after the 2008 recession. However, rising home values, a larger, wealthier workforce, and declining foreclosure numbers gave them the confidence to let off slightly on the reins of the housing market.

How many buyers will be enticed into buying is yet to be seen, but anyone looking for or has an FHA loan should discuss the changes with their lender and see what potential savings could be had.



Mortgage Rates Hit New Low for 2014

by Tim Hart

Mortgage Rates hit a new yearly low for 2014, a positive sign for potential home buyers. With the year fast coming to a close, this is the lowest mortgage rate seen in quite some time. Mortgage rates hit 3.89% for a 30-year fixed-rate mortgage, the lowest since May 2013.

Rates dipped amid lower than expected home sales. Demand seems to be holding steady but would have been better if not for lagging wage growth.

The 15 year fixed-rate mortgage also dipped to 3.1%, close to numbers seen in late October.

Despite lower rates, applications were down 7.3%. For home-buyers who may not have been able to afford or qualify for a home mortgage, or had held off for other reasons, now may be the time to re-evaluate how the drop in rates may affect them.


Fannie Mae, Freddie Mac Announce 3% Down Payment Loan

by Tim Hart


The Federal Housing Finance Agency announced its attempt to better increase mortgage credit availability to US borrowers in October. Now, with the recent announcement of a 3% Down Payment loan by both Fannie Mae and Freddie Mac, it seems the FHFA’s efforts have paid off.

Both Fannie Mae and Freddie Mac announced new 97 loan-to-value mortgages that will be available to first time homeowners. The new loans help credit-worthy borrowers without capital get a home loan. The loan should help buyers who want to own a home and can afford monthly payments but cannot pay for the down payment and closing costs.

Both Fannie Mae and Freddie Mac don’t foresee the loan becoming a major part of their business. The loans target a very specific borrower in their eyes and the loan will be awarded with this specificity in mind. With that being said, the loan should appeal to a lot of millenials, who as of yet, have not been buying up real estate like previous generations. Many economists have predicted millenials becoming major players in the real estate world in the coming years and steps like the one taken by the FHFA to broaden credit requirements should help bring these buyers to the table.

For those first time homebuyers who wanted a home, but until now did not have enough capital to put down, now may be the time for them to re-engage their lender and see if a 3% down payment is a feasible alternative to a standard 30 year fixed rate mortgage.




Fifteen-Year Fixed-Rate Mortgage Hits Lowest Since 2013

by Tim Hart

For homebuyers looking to refinance their mortgage, great news came surrounding 15 year mortgage interest rates. The average rate for a 15 year fixed-rate mortgage dropped to 3.08%, the lowest level since June of 2013. The rate fell by 0.1 percent compared to last week and has dropped significantly compared to the 3.36% that it started at earlier in the month. Rates on 30 year loans also dipped 0.05% and has dipped below 4 % for the first time since June 2013.

With a struggling economy, investors have avoided investing overseas and instead have turned to government bonds and mortgage-backed securities, lowering interest rates.

Homeowners with recent mortgages can refinance their thirty-year loan for the 15 year loan, at its current rate. Homeowners should be aware that their payments will not go down in a refinance and in general they will almost always go up. According to CNN money, for anyone with a mortgage balance of $200,000, they can expect to pay about $340 a month more than in a 30-year mortgage. However, instead of making a $1075 payment for 25 more years, they could instead pay $1,423 over 15 years. A homeowner could potentially save $137,000 in interest over the lifetime of the loan.


New 15 year Mortgage with No Down Payment Unveiled

by Tim Hart

A non-profit company is testing a new mortgage idea that could impact mortgages from here on out. The company is offering low to moderate income home buyers a 15 year mortgage with little to no money down. The loan, called the Wealth Building Home Loan, differs from a traditional 30 year fixed rate loan because income is weighed much more heavily than in a traditional loan. The WHBL gives a generous credit requirement and allows buyers to build their equity much faster than a standard mortgage.

But the loan truly differs from a standard loan because it focuses on paying off the principal first, not the interest. According to its creators, in the first three years 77% of each monthly mortgage payment pays off the principal, creating huge amounts of equity for home owners looking to sell in a short period of time. For a standard 30 year loan, in those years 68% of the payment goes towards paying the interest, leaving buyers with little equity comparatively.

Now obviously, there has to be some take to the give in this loan. Due to its short term and focus on principal, a WBHL will always have higher monthly payments than a standard mortgage. But the return on equity and 15 years less of monthly payments may be a worthy trade off for higher payments initially. The WBHL will have its first test run in Charlotte, North Carolina, which was chosen as the initial test market.

More recent articles on mortgages:

Mortgage Rates Below 4%

Wealthy Paying Lower Mortgage Rates

Americans Overpaying for Mortgages?



Mortgage Rates Drop Below 4 Percent

by Tim Hart

The interest rate on a 30 year fixed mortgage loan dropped below 4% for the first time since June of 2013. The rate hit 3.97% this last week and now has become a more opportune time to consider purchasing real estate. The drop has been a much larger drop than other adjustments taken this year.

According to CNN real estate, the drop in rates have come because investors have been buying US treasury bonds in droves over the last week. In general, mortgage rates usually move in sync with the 10 year bond note, so when the yield fell to 1.86%, it seemed natural that fixed-mortgage rates would drop as well. Investors have moved to purchasing bonds because of the economic unrest in Europe. Rates have actually lowered because of investors actions, where most experts expected mortgage rates to rise after the Fed pulled back on its economic stimulus.

If you are considering purchasing real estate in Bozeman, Belgrade, Big Sky or the greater Gallatin Valley, lower rates may have made you far more eligible to buy than you may have been even a week ago. Over 30 years, even the smallest adjustments in mortgage rates can save you a lot of money in the long run.


Wealthy Buyers Paying Lower Mortgage Rates

by Tim Hart

Wealthy homebuyers in the US are receiving cheaper loans in higher numbers than other homebuyers also applying for mortgages. These deep pocketed buyers are paying lower average rates on high dollar value loans known as jumbo mortgages. The Mortgage Bankers Association reported that the average rate of jumbo loans for houses above $417,000 or $625,000 in high priced areas averages around 4.24% interest. However, a normal buyer, paying an standard 30 year fixed mortgage can expect to pay interest rates of 4.36 percent.

Now, lenders are accepting smaller down payments and even waiving mortgage insurance. Down payments on the big loans can be as small as 10% of the value, compared to the standard 20 percent. Banks have even begun lowering the credit standards that they use to underwrite such loans. Before, a jumbo borrower would be expected to maintain at least a 700 credit score to even be eligible. Now, lenders have given out loans to people with scores as low as 650.

Why though? Well in general, banks are willing to give these friendly loans, not for the profit they make themselves, but oftentimes on the capital the can use with other clients. Banks take that capital to use in brokerage accounts or retirement funds, where such capital can exponentially increase profit margins. Then, they can turn to prospective clients and show them the investment potential of that bank. Keeping those big loans on the books allows them to invest and lend more, adding to their clientele and prestige.

Now may be the perfect time for big buyers to do just that—buy big. Mortgage rates are low, the market is stabilizing, and as banks continue to make jumbo loans more appealing, wealthy buyers can take full advantage.



Real Estate Lending Increasing

by Tim Hart

The financing sector has seen an increase in lending for construction and commercial real estate loans. According to the FDIC, US banks have been taking advantage of lower loss rates in these sectors, bringing their loan totals to levels not seen since 2007. Loss rates for construction and land development is now down to 0.24%. In 2009, the rate of loss was at 3.58%. Whereas banks had shied away from loans associated with the recession, now it seems banks are more willing to take the plunge.

In general, banks are easing loan terms while also giving out more loans daily. Banks have found they are under increased competition; therefore, many of these banks are willing to take on more risk and lend more. The Mortgage Bankers Association revealed that loans for commercial and multi family purchases increased by 19% compared to quarterly numbers in 2013.

If you are a potential buyer and you were not given a loan in the past, now may actually be a good opportunity to check again and see if a bank is more willing to negotiate a loan this time around.




Americans Paying too Much for their Mortgages?

by Tim Hart

American home owners are missing out on lower mortgage payments according to Freddie Mac’s Primary Mortgage Survey. Mel Watt, head of the Federal Housing Finance Agency, has gone on tour throughout the country, in order to spread awareness on the benefits and risks of refinancing their home. Mortgage rates hit their lowest level in years, at 4.1%, supporting the fact that now may be the time to refinance.

Home owners have had a chance during the recession to refinance through the Home Affordable Refinance Program (HARP), but now many Americans assume that HARP no longer applies to them. However, Mel Watt disagrees. Any homeowner who owes more money than their house is worth will struggle to find any lender who is willing to refinance. The HARP program makes this possibility much more likely. Mel Watt believes that almost 800,000 Americans are missing their opportunity to save serious money on their mortgage. In some cases, specific borrowers have used HARP to save $200 a month.

Please make sure to consider the potential benefits and drawbacks of refinancing a home. Also make sure to re-check your credit to see if it has improved since you took out the loan as you may receive better rates.


Displaying blog entries 1-10 of 13